Patent Settlement with HTC Is a Win For Nokia

Nokia announced today that it has settled all pending patent litigation with HTC, and the two companies have entered into a patent and technology collaboration agreement where “HTC will make payments to Nokia and the collaboration will involve HTC’s LTE patent portfolio, further strengthening Nokia’s licensing offering.” The full terms of the agreement are confidential.

Nokia has a successful and well established patent licensing program in place, and reportedly earned €500 million in patent royalties from 2011-2012. A portion of Nokia’s historical licensing revenue can be attributed to the company’s significant number of standard essential patents (SEPs), and particularly its SEPs related to LTE and underlying technologies. Nokia is clearly well-versed in licensing its own LTE patents, and understands the marketplace, royalty rates, and FRAND issues that may be involved.

Thus, we suspect that today’s deal between Nokia and HTC may involve a joint-venture where Nokia offers for license HTC’s LTE patent portfolio, and the two companies share in the licensing revenues.

As we reported in an earlier post, Nokia is engaged in similar joint ventures to monetize patents with MOSAID Technologies and Vringo.

The agreement appears to be a positive win for Nokia, as it will receive patent license payments from HTC, and it will be relieved from the burden of battling HTC in various jurisdictions around the world.

Today’s deal follows a number of cross-licensing deals announced by major technology companies within the last few weeks: Google & Samsung, Samsung & Ericsson, Google & Cisco, and Samsung & Cisco. On one hand, these settlements may signal an end to the highly litigious atmosphere in the smartphone industry that has been escalating in recent years. However, the joining of forces among major players in the Android ecosystem may simply force many companies to choose sides between the major operating system providers.